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IKAR in Mass Media

PM markets: size of hedge fund net shorts help grains

18 февраля 2016 года

Wheat rallied on Tuesday, as US traders returned to work after a national holiday.

This gave US markets their first chance to respond to commitment of traders data released by the US Commodity Futures Trading Commission (CFTC) on Friday afternoon.

Outside markets were mixed, with the Dow Jones up 1.3% as Chicago markets closed, while April Brent crude futures were down 3.4%.

Hedge funds short wheat

The CFTC data showed hedge funds hiking their net short in Chicago wheat by a historically large 32,000 contracts.

And in Kansas City-traded hard red winter wheat speculators lifted their net short to a record large 26,317 lots.

These movements are supportive for prices, as they leave plenty of room for short-covering.

'Range bound pattern'

Tregg Cronin, of Halo Commodities, noted "stabilisation in outside markets along with last week's commitment of traders data showing sizable fund shorts once again in our space has probably induced some short-covering in our space".

But Richard Feltes, of RJ O'Brien, warned that the rally on the CFTC data was "merely a bounce from last week's new lows".

Mr Feltes saw "nothing here to change the range bound pattern".

March Chicago wheat finished up 1.3% at $4.64 ј a bushel.

March Kansas wheat finished up 1.2% at $4.39 ѕ a bushel.

Fresh ergot fears

In Europe, wheat futures turned lower, as fresh concerns about Egyptian import prospects proliferated.

Sellers have been reluctant to bid in tenders by Egypt, the world's top wheat importer, over fears that shipments would be rejected for ergot contamination, even if those levels fell below those specified in the tender.

And those fears proved to be well founded, as news service Reuters reported that it had obtained official documents showing that Egypt had rejected another cargo, this time from Canada, for ergot contamination suggesting that the zero tolerance policy is still in place.

Paris markets down

Russian wheat prices in the Black Sea were down $2 a tonne to $179 a tonne at the end of last week, the Russian agricultural consultancy IKAR said in a note.

Russian consultancy SovEcon, saw Black Sea wheat prices at $181 per tonne, unchanged from a week earlier.

In Paris, March wheat futures finished down 1.6%, at E153.00 a tonne.

South American rains

The size of the speculative net short in Chicago corn was also increased last week.

Still, prospects for corn and soybeans in South America are looking strong.

Kyle Tapley, of MDA Weather Services, reported that widespread rains would continue across much of Argentina this week, further easing dryness, although there could now be "some wetness concerns" in certain areas.

And in Brazil, rains in the south would "favour late growth of soybeans and first crop corn, but will slow maturation of corn" while dry weather in the north would allow fieldwork to progress there.

March corn futures finished up 1.1%, at $3.63 a bushel.

Soybean crush disappoints

Friday's data also saw hedge funds up their net-short Chicago soybeans by 42,000 tonnes, the most bullish week-on-week move in more than three years.

But US soybean crushing data was negative, as volumes crushed undershot market expectations.

The National Oilseed Processors Association, the largest trade body for US soybean processors, saw soybean crushing for January down 7.5% from a year earlier and at 150.453m bushels.

This was the smallest January crush since 2012, and below analysts' forecasts of 153.800m-158.000m bushels.

Surprisingly strong exports

And markets also had to contend with the weak January soybean import figures released by Chinese customs officials on Monday.

But there was support from US export data, which showed soybean export inspections at 1.76m tonnes, above analyst forecasts of 1.00-1.20m, and the highest number since November.

In the end March soybeans finished up 0.7% at 8.79 ѕ a bushel.

Vietnamese dryness fears

Robusta coffee futures rose, helped by a warning from the Vietnamese coffee association Vicofa that dry weather threatens to "seriously affect" production in the world's top grower.

Speaking to Agrimoney, Jack Scoville of Price Futures group agreed that Vietnam had been seeing dry weather, but downplayed the effect on prices.

"The market's kind of dismissing that," Mr Scoville said, citing "ideas are there that there's plenty of coffee there to sell anyway".

May robusta futures settled up 0.6%, at $1,442 a tonne.

March arabica coffee settled down 0.4%, at 117.00 cents a pound.

Raw sugar futures rallied, as New York markets reacted to a larger-than-expected reduction in speculators' net long position in Friday's CFTC data.

May raw sugar futures rose 0.6%, at 13.20 cents a pound.

Source: AgriMoney.com  |  #grain   |  Comments: 0   Views: 77

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